Penalty Owed to a Government Agency Due to Fraud is Dischargeable in Chapter 13 Bankruptcy

By Ansley Owens, Contributing Writer and Intern for the NACTT Academy (Nashville, TN)

The U.S. Bankruptcy Court for the Eastern District of Michigan recently determined that a Chapter 13 debtor could discharge a government penalty against her even though it arose from fraud. Michigan Unemployment Insurance Agency v. Priscilla Annette Andrews (In re Andrews), No. 15-46058, 2015 WL 5813418 (Bankr. E.D. Mich. October 2, 2015).

The Michigan Unemployment Insurance Agency (the “Agency”) claimed that Priscilla Andrews (the “Debtor”) was overpaid $6,897 in unemployment benefits because she intentionally failed to disclose wages from . . .

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